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DHS Director: No Plan B if private option not renewed

LITTLE ROCK — The state Department of Human Services does not have a contingency plan in case the Legislature decides not to reauthorize the private option, DHS Director John Selig said Tuesday.

Selig told the Joint Budget Committee the agency will ask lawmakers to approve the appropriation of $915 million in federal funding for the private option during the fiscal session that begins Feb. 10, which would require a three-fourths vote of both chambers.

The likelihood of that happening appears to have diminished in recent days. The original appropriation for the private option — the state’s program that uses federal Medicaid money to provide private insurance to low-income Arkansans — passed last year with one vote to spare in the state Senate, but two of the “yes” votes have disappeared.

Paul Bookout, a Democrat from Jonesboro who voted for the private option, resigned from the Senate in August after being fined $8,000 by the state Ethics Commission for converting campaign contributions to personal use. He was replaced last week in a special election by Republican John Cooper of Jonesboro, who has said he favors not renewing the private option.

Also, Sen. Missy Irvin, R-Mountain View, who voted for the private option last year, told conservative blog The Arkansas Project on Monday that she intends to vote against reauthorizing the program because she now believes it is “leading us in the wrong direction.” Irvin did not immediately return a call Tuesday seeking comment.

“The state budget was built on the assumption of the private option being in place, so if it goes away, you start with the governor and (the Department of Finance and Administration) and the Legislature saying, ‘OK, what do we want to fund and not fund?’” Selig told reporters after Tuesday’s Joint Budget Committee hearing. “We don’t have a Plan B because we don’t know how much funding we have and how much savings we have until they’ve made some decisions.”

Several legislators asked Tuesday about the potential impact of abandoning the private option.

Selig said the program is expected to save the state $89 million in the next fiscal year and more than $600 million between now and 2021. He said much of the savings would come from moving about 200,000 Arkansans from the traditional Medicaid program into the private option, something that has already happened for about 100,000 Arkansans.

The state pays 30 percent of the costs of the traditional Medicaid program, with the federal government paying the rest. Under the private option, the federal government pays all costs for the first three years, after which the state’s share of the cost gradually increases to 10 percent.

Also, the state now pays about $100 million a year to hospitals to cover uncompensated care, but it could recapture some of that cost under the private option, Selig said.

State Medicaid Director Andy Allison told the panel that nearly 80,000 Arkansans have signed up for the private option, of whom 59,000 were enrolled in plans by Jan. 1.

“If we do away with it today, then 80,000 folks for the most part would be without coverage?” asked Rep. Jim Nickels, D-Sherwood.

“More than that,” Allison said. “Those individuals who have been determined medically frail, they are served through the traditional Medicaid program because Medicaid offers more services than private coverage, but their eligibility for coverage at all is established through the Healthcare Independence Act (which created the private option), so if the Healthcare Independence Act goes away, their coverage goes away entirely.”

Selig also told the panel that it may not be possible for certain people to go back to Medicaid from the private option. He said about 20,000 Arkansans previously were participating in the ARHealthNetworks program, but the program is being discontinued and may be impossible to revive because it offered very limited coverage and was only permitted by a federal waiver.

Rep. David Meeks, R-Conway, asked if the federal government might impose any penalties or file a lawsuit against Arkansas for discontinuing the private option.

Allison said it could not, because the U.S. Supreme Court has said the federal government cannot force states to expand their Medicaid programs. The private option is Arkansas’ alternative plan, approved by the Obama administration, for using the money that the federal government would have provided for expansion of traditional Medicaid.